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Brexit: there's more than one "Swiss trap"

UK Brexit negotiators are reported to be keen to avoid the so-called "Swiss trap" of entering into a series of linked agreements with the EU, where breach of one agreement would potentially lead to suspension of all of them (as is the case with many of Switzerland's bilateral agreements with the EU). However, this is not the only way in which the Swiss experience could be relevant to Brexit. A number of other issues were highlighted by Swiss judge and former President of the EFTA Court, Professor Carl Baudenbacher, when he gave evidence to the House of Lords EU Justice Sub-Committee last week. Although the focus of the evidence session was on dispute resolution, Professor Baudenbacher made the following points about Switzerland's relationship arrangements with the EU (which, much like Norway's participation in the EEA, were originally intended to act as a transition towards full EU membership, but have become a longer-lasting, de facto alternative to being a full EU member state):

Does the UK need to accept all four Single Market freedoms? Although Switzerland effectively participates in the Single Market for goods and has also accepted the principle of free movement of people, its bilateral arrangements do not extend to free movement of services and capital. In view of this, Professor Baudenbacher suggested that – despite repeated EU insistence that the four freedoms are "indivisible" - it may be possible to negotiate a significant degree of participation in the Single Market without necessarily signing up in full to all four freedoms (indeed, the EU's arrangements with Ukraine allow it a high degree of participation in the Single Market for both goods and services but without providing for free movement of people).

EU likely to insist on monitoring and enforcement: That said, the EU has rebuffed recent Swiss attempts to deepen its trading relationship with the EU in areas such as services, insisting that Switzerland should first sign up to an independent court and monitoring system. This is relevant to another of the UK's red lines, namely its insistence that after Brexit, the UK should no longer be subject to the jurisdiction of the ECJ (for discussion of the thinking behind the EU's stance on this issue, see "Brexit dispute resolution: a bridgeable gap?").

"Docking" to the EEA-EFTA institutions: In response, Switzerland proposed the creation of a special Chamber of the Swiss Federal Supreme Court and a Swiss monitoring authority – but perhaps not surprisingly, these ideas were rejected by the EU on the basis that they would not be sufficiently independent. EU and the Swiss negotiators then developed the idea of using the EFTA Court and the EFTA Surveillance Authority (which currently supervise the EEA Agreement) to supervise the EU-Swiss bilateral agreements, a concept referred to as "docking" to the EEA-EFTA institutions. However, the Swiss government decided not to pursue this proposal.

A different type of "Swiss trap"? Since then, Switzerland has not been able to make any significant progress in extending or updating its bilateral agreements with the EU – which could be described as another type of "Swiss trap" that UK negotiators need to be wary of. However, Professor Baudenbacher suggested that the "docking" concept (although as yet untested) could provide a means of enabling the UK to pursue a deeper trading relationship with the EU, whilst respecting the UK's red lines on ECJ involvement. He went on to argue that the EFTA Court does not slavishly follow the ECJ and would suit the UK better than the ECJ in a number of respects (see further Q 12 of our Q&A on the EEA Agreement).

"Docking" not a "silver bullet": whilst "docking" to the EFTA Court might assist in relation to many of the economic/trade aspects of Brexit, it is by no means a panacea; for example, in response to questions on the European arrest warrant and EU measures concerning matrimonial and family law proceedings, Professor Baudenbacher said that he could not conceive that the UK would be able to make use of the EFTA Court for these purposes (and that if the UK wished to continue to participate in these systems, it would probably have to accept ECJ jurisdiction in those areas).

Professor Baudenbacher is due to step down as an EFTA Court judge in March this year (although Swiss, he acts as Liechtenstein's judge on the EFTA Court; Switzerland does not have its own judge on the Court, as it is not a member of the EEA). At the end of his evidence, several peers suggested (slightly tongue in cheek) that when he retires, he might consider acting as a consultant to the UK government on the Brexit negotiations. It remains to be seen whether the UK government would take him on - he may have blotted his copybook last year when he suggested that parts of the UK's August 2017 position paper on dispute resolution could have been "compiled by a first year student" (see this presentation at slide 17).

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